Beechcraft Protesting Air Force's Contract Denial

Beechcraft Corp. is formally protesting the Air Force's award of a $427.5?million light air support contract to Sierra Nevada and Embraer.

The Air Force two weeks ago awarded the contract for an initial order of 20 planes for use in Afghanistan.

Loss of the contract is a blow to Beechcraft, which emerged from Chapter 11 bankruptcy protection last month.

The contract eventually could be worth up to $950?million, depending on future orders.

Beechcraft, formerly Hawker Beechcraft, had proposed the AT-6 attack aircraft, a derivative of its T-6 trainer, for the project. Sierra Nevada partnered with Brazil-based Embraer to offer its A-29 Super Tucano.

Sierra Nevada said the planes would be assembled at a facility in Jacksonville, Fla.

Beechcraft met with the Air Force for a debriefing about the contract's loss earlier this week.

The company filed a protest with the Government Accountability Office on Friday afternoon.

After the debriefing, Beechcraft CEO Bill Boisture said in a statement that the company was "very perplexed by this decision."

"Our belief that we have the best aircraft was confirmed by the Air Force rating our aircraft 'exceptional,' and the fact that we are the lower-cost solution was confirmed by the USAF's public award announcement," he said.

Beechcraft's bid was much lower, Boisture said.

"We simply don't understand how the Air Force can justify spending over 40 percent more -- over $125 million more -- for what we consider to be less capable aircraft," Boisture said. "Given our experience of last year and our continued strong concern that there are again significant errors in the process and evaluation in this competition, we are left with no recourse other than to file a protest with the GAO. The Air Force needs to make the right decision for the nation and our future allies."

About 1,400 jobs in Kansas and other states are in jeopardy as a result of the Air Force's decision, Beechcraft said.

U.S. Rep. Mike Pompeo, R-Kansas, said that the Air Force's decision to buy a "less capable and more expensive" airplane "doesn't seem to me to make much sense."

"I'm befuddled," Pompeo said of the decision. "Since we can't afford to open the White House (for tours because of sequestration), can we afford to pay one-third more for an airplane?"

It's important to the taxpayers that the Air Force run a selection process that works, he said.

"If it's demonstrated that's what they did, so be it," Pompeo said. "That's the task."

The Machinists union's international president, Tom Buffenbarger, called the Air Force's contract award to Embraer and Sierra Nevada a blow to American workers and taxpayers.

"We should be very concerned whenever U.S. taxpayer dollars are used to create hundreds of jobs in any foreign country,' Buffenbarger said in a statement. "We should be outraged when the loss of those jobs also threatens vital U.S. economic and national security interests."

The U.S. is "bending over backwards" to accommodate Brazil in the midst of sequestration, Buffenbarger said. "The claim that most of their plane would be 'built in the U.S.A.' adds insult to the injury of the 1,400 jobs that will be destroyed here at home."

A Sierra Nevada executive did not return calls for comment Friday.

The light air support aircraft would give the Afghan National Army Air Corps a fixed-wing strike capability as well as reconnaissance and training abilities. The planes are considered a crucial element in the United States' withdrawal strategy from Afghanistan.

The competition for the award has taken nearly three years and has been plagued by delays and legal challenges as the two rival manufacturers battled for the contract.

It's the second time Beechcraft has protested an award to Sierra Nevada and Embraer.

Sierra Nevada sued in June for the reinstatement of the contract after the Air Force canceled the deal in March 2012 following objections by Beechcraft, which said it had wrongly been excluded from the bidding process, and pressure from lawmakers.

The investigation found that the bidding process had been flawed and that bias existed toward Embraer and Sierra Nevada, which led to the restart of the competition.

Sierra Nevada then contended that the revised bid proposal was tilted in favor of then-Hawker Beechcraft.

U.S. Court of Federal Claims Judge Christine O.C. Miller wrote in a Nov. 1 opinion that, based on the evidence of bias, "the Air Force's decision to cancel the contract award to SNC and re-solicit proposals was reasonable and rational and should stand."

Sierra Nevada said the light air support contract means more than 100 U.S. companies will be supplying parts and services for the plane.

And it said the Super Tucano would be assembled in Jacksonville.

The company said it would also create an unspecified number of jobs at Sierra Nevada and Embraer.

Pompeo questioned whether Embraer would be able to set up the Jacksonville production line for the Super Tucanos for delivery to the Air Force.

"It (the production line) is not located in the United States today," Pompeo said. "The (Jacksonville) facility, as best we can tell, has been identified as an empty hangar. It is no small undertaking to generate a production line."

Getting the equipment, parts, work force and management into place is a big task to undertake, he said.

"My guess is they'll fly it in here nearly complete (from Brazil) and paint it, and they'll call it final assembly or they will put the canopy on," Pompeo said.

Or, he said, the company will find itself up against the deadline and will tell the Air Force that there are two airplanes ready to roll off the production line in Brazil and ask them to take those.

"If they need them, they will find a way to get a waiver, and pretty soon, that commitment (to assemble planes in America) looks pretty watered down," Pompeo said. "That contract is just for 20 airplanes. Are you going to set up a new production facility to build 20 airplanes? As a manufacturing guy, it makes no economic sense whatsoever. To stand up a manufacturing plant to build a couple dozen airplanes is unprecedented."